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New Jersey’s Tax System A National Perspective. Joseph Henchman Vice President, State Projects Tax Foundation henchman@taxfoundation.org. 2 States. Michigan New York. Tax Foundation Ranks New Jersey. State Business Tax Climate Index 49 th (1 st is best, 50 th is worst)
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New Jersey’s Tax SystemA National Perspective Joseph Henchman Vice President, State Projects Tax Foundation henchman@taxfoundation.org
2 States • Michigan • New York
Tax Foundation Ranks New Jersey • State Business Tax Climate Index • 49th(1st is best, 50th is worst) • Second worst property tax, third worst income tax • State-Local Tax Burdens • 2nd(1st is highest, 50th is lowest) • Residents paid 12.42 percent in state &local taxes as a percentage of income in 2010. Dropped 1994-2002, then rose • Location Matters: Corporate Tax Costs • Mature Firms: 41stlowest costs • New Firms: 27th lowest costs
Comments • High corporate tax rate (9.0 percent) • High income tax (5th highest top rate) • High property taxes on land and buildings • High wage limit for unemployment taxes • Does not apply sales or property tax to equipment – one of few states to do so • Generous manufacturing incentives covering for broken tax system
Possible Major Changes • Repeated income tax-for-property tax swaps have failed; left NJ with some of the highest income AND property taxes • High tax burden makes tax cuts difficult without spending cuts • Local government reform re property tax • Sales tax broadening as pay-for • Corporate tax & inheritance tax